U.S. Agencies Issue Regulations on No Surprises Act’s Independent Dispute Resolution Process and Good Faith Estimate Requirements

Provider–Insurer IDR Process

The NSA called for the Departments to issue—not later than December 27, 2021—regulations implementing the statute’s IDR process for provider–payor disputes over out-of-network reimbursement rates. The interim final rule reflects the IDR timelines set forth in the statute. Healthcare providers may—within 30 days from when the healthcare provider receives an initial payment or a notice of denial of payment from the payor—initiate negotiations with the payor to determine an appropriate payment amount. If the negotiations do not result in an agreed-upon payment amount, then at the end of the 30-day period, either party to the negotiations has four days in which to initiate the IDR process. The initiating party must provide notice of the initiation to the other party and to the appropriate federal agency through a unified federal IDR portal. The initiating party must also provide notice of the certified IDR entity that the party prefers.

The party receiving the notice of the IDR initiation has three business days to object to the selected IDR entity and to propose an alternative. If the parties do not agree on an IDR entity within those three days, the HHS Secretary will select one. Within 10 days of the selection of the certified IDR entity, the healthcare provider and payor must submit three categories of information, which guides the IDR entity’s decision:

• An offer for the out-of-network payment amount, expressed as both a dollar amount and the corresponding percentage of the qualifying payment amount (QPA), which is generally the payor’s median contracted rate for that item or service furnished by the same or similar provider in the same geographic area; 
• Information related to that offer, as requested by the IDR entity; and 
• Certain additional information relating to the type of healthcare provider and payor at issue.

Parties may also submit any additional information relevant to the party’s bid, including information relating to statutorily-specified “additional circumstances”: (1) the healthcare provider’s level of training, experience, and quality, (2) the healthcare provider’s market share, (3) the acuity of the individual receiving the item or service, or the complexity of furnishing such item or service, (4) the teaching status, case mix, and scope of services provided at the facility, and (5) demonstrations of good faith efforts (or the lack thereof) made by the healthcare provider and the plan or issuer to enter into network agreements in the past four plan years.

Mirroring the statute, the interim final rule also prohibits the IDR entity from considering three factors: (1) the usual and customary charges for the service or item, (2) the “amount that would have been billed” by the healthcare provider if the balance billing provisions were not applicable, and (3) the rate for the service or item payable by a public payor.

Unless the parties to the IDR process agree to a payment amount before the IDR entity makes its determination—in which case that payment amount controls—the IDR entity must, within 30 days of the selection of the IDR entity, determine the payment amount by selecting one of the offers.

In making its determination, the interim final rule requires the IDR entity to select the offer closest to the QPA unless the entity determines that “credible information submitted by either party . . . clearly demonstrates that the qualifying payment amount is materially different from the appropriate out-of-network rate, or if the offers are equally distant from the qualifying payment amount but in opposing directions.” In such cases, the IDR entity must select the offer that the entity determines best represents the value of the item or service, which could be either party’s offer.

The party whose offer is not selected must pay the IDR fee predetermined by the IDR entity. Certified IDR entities must charge a rate in the range of $200–$500 (updated annually through guidance), unless the Departments approve a higher deviation—a system that compounds the financial hit to the losing party. Both parties must also pay a nonrefundable administrative fee set by the Departments annually through guidance.

Good Faith Estimates

The interim final rule also establishes requirements for the provision of good faith estimates of expected charges for uninsured or self-pay patients. HHS announced in August 20, 2021, guidance, however, that HHS will defer enforcement of the requirement that healthcare providers provide good faith estimate information to individuals who are enrolled in a health plan or coverage and seeking to submit a claim to their payors. HHS recognized that, given the complexities of developing the technical infrastructure for transmission of the necessary data from healthcare providers to plans and issuers, compliance with this requirement to provide good faith estimates to enrolled or covered individuals is likely not possible by January 1, 2022.

A good faith estimate is a notification of expected charges for a scheduled or requested item or service, including items or services reasonably expected to be provided in conjunction with such items or services. Healthcare providers must (1) inquire and determine whether the individual is uninsured or self-pay, (2) notify the uninsured or self-pay individual that a good faith estimate is available, and (3) provide a good faith estimate to the uninsured or self-pay individual. Similarly, if a good faith estimate is requested, the healthcare provider must determine whether the individual is uninsured or considering paying out of pocket for the services. If either is the case, the healthcare provider must then issue a good faith estimate. The good faith estimate must include:

• Certain identifying information on the patient;
• Information on the items and/or services reasonably expected to be furnished;
• Information on the healthcare provider; and
• Disclaimers that convey (1) that the good faith estimate provided is only an estimate, (2) information on the individual’s rights to dispute the actual billed charges if they are substantially in excess of the good faith estimate, and (3) that the estimate is not a contract and does not require the individual to obtain the items or services.

Healthcare providers and facilities other than the primary (referred to as “convening”) provider/facility “that furnish[] items or services that are customarily provided in conjunction with a primary item or service” also have obligations to provide good faith estimate information. These providers and facilities, referred to as co-providers and co-facilities, must also submit good faith estimate information to the convening provider/facility, which will then provide this information to the patient. Recognizing, however, that “it may take time” for healthcare providers “to develop systems and processes for receiving and providing the required information from co-providers and co-facilities,” HHS will—from January 1 through December 31, 2022—exercise enforcement discretion where a good faith estimate provided to an uninsured or self-pay individual does not include expected charges from co-providers or co-facilities. 

Patient–Provider Dispute Resolution Process

A patient may initiate the patient–provider dispute resolution process if the total billed charges from the healthcare provider are “substantially in excess” of the total expected charges listed in the good faith estimate, where “substantially in excess” means an amount that is at least $400 more than the total amount of expected charges initially provided. The patient has 120 calendar days from receiving the initial bill to initiate the dispute resolution process by submitting a notification to HHS, which chooses a Selected Dispute Resolution (SDR) entity to resolve the dispute. While the process is pending, the healthcare provider must not seek to collect any additional amounts from the patient. If the parties reach an agreement on the payment amount before the date on which a determination by the entity must be made, the dispute resolution process terminates.

If the billed charge is greater than the good faith estimate, but the SDR entity determines that the healthcare provider presents no credible information that the difference between the billed charge and the good faith estimate stems from unforeseen circumstances that could not have been reasonably anticipated, then the SDR entity must determine that the amount to be paid is the good faith estimate. If, however, the charge is greater than the good faith estimate and the SDR entity determines that the provider or facility does present credible information reflecting that the difference between the charge and the good faith estimate is based on unforeseen circumstances that could not have been reasonably anticipated, then the SDR entity must determine that the amount to be paid is the lesser of:

• The billed charge; or
• The payment amount paid by a plan or issuer for the same or similar service by the same or similar provider in the geographic area where the service is provided.

At the initiation of the dispute resolution process, the uninsured or self-pay individual must pay the SDR entity an administrative fee. The SDR entity must remit that fee to HHS upon receiving an invoice from HHS. If the uninsured or self-pay individual prevails, the healthcare provider must pay the individual the administrative fee in the form of a reduction to the payment amount determined by the SDR entity.